In a move that upended the media landscape, Paramount Skydance Corp. (NASDAQ:PSKY) officially launched a hostile, all-cash tender offer for Warner Bros. Discovery, Inc. (NASDAQ:WBD) on Monday.
- PSKY stock is climbing. See the real-time price action here.
The Bid
The bid, valued at $30 per share or approximately $108.4 billion, bypasses the Warner Bros. board to appeal directly to shareholders, challenging the company's recent agreement to sell its studio and streaming assets to Netflix, Inc. (NASDAQ:NFLX).
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David Ellison, CEO of Paramount Skydance, is pitching his offer as a “superior alternative” that keeps the legendary studio intact, contrasting it with Netflix's plan to break up the company.
While Netflix's accepted offer sits at approximately $28 per share (a mix of cash and stock for specific assets), Paramount's proposal is a full buyout of the entire entity, including its linear cable networks.
In an interview with CNBC regarding the hostile move, Ellison was emphatic about his company’s commitment.
"We're really here to finish what we started," Ellison told CNBC on Monday. "We put the company in play."
The Regulatory Battlefield
A key part of Paramount's pitch is regulatory safety. Legal advisors for Paramount have argued that a Netflix-WBD merger would face insurmountable antitrust hurdles worldwide, as regulators would reject the argument that Netflix competes in the same ad-supported market as Instagram or YouTube.
However, the Warner Bros. board has previously expressed concern over Paramount’s heavy reliance on non-U.S. funding and that the involvement of sovereign wealth funds could trigger a strict review by the Committee on Foreign Investment in the United States (CFIUS).
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Some of the investors backing Paramount's bid include Saudi Arabia's Public Investment Fund, the Qatar Investment Authority, Abu Dhabi's L'imad Holding Company PJSC, and President Donald Trump's son-in-law Jared Kushner's Affinity Partners.
Ellison pointed to Paramount's "friendly" relationship with the Trump administration during Monday's CNBC interview, which could potentially help the company through regulatory hurdles.
The Bottom Line
Paramount is betting that Warner Bros. shareholders will be in favor of the sweeter deal.
"We're sitting on Wall Street, where cash is still king. We are offering shareholders $17.6 billion more cash than the deal they currently have signed up with Netflix, and we believe when they see what it is currently in our offer that that's what they'll vote for," Ellison said.
Netflix shares were trading 4% lower in Monday's midday trading, while Paramount Skydance and Warner Bros. Discovery shares were up by 9% and 3.5%, respectively.
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